The Economic Outcomes of Refugees and Other Migrants in the UK

In the coming years, the UK will be hosting a growing number of refugees. Although the number of asylum applications in the UK remains below some other EU countries, they have increased by 80% since 2010, reaching the highest level in over a decade. The UK Government has also pledge to resettle over 20,000 Syrians refugees by 2020. The dynamics of refugee economic integration are likely to differ from those of other migrants to the UK. This is important because refugees are likely to have major initial economic disadvantages and, labour market integration policies that work for migrants in general might have to be adjusted to the particular situation and socio-economic characteristics of refugees.

There is rich and comprehensive qualitative evidence on the situation of refugees in the UK. However, while there is substantial quantitative evidence on the labour market and overall economic outcomes of migrants in the UK, there is scarce evidence on the specific case of refugees. The main reason for this has been the lack of data. Most datasets do not record whether the individual had “refugee status” at some point while in the host country. Until recently this was also the case in the UK Labour Force Survey (LFS), the main survey about labour market issues in the country. However, this changed in 2010 with the introduction of a question that asks about the main reason for original migration to the UK. One of the possible options is “seeking asylum”. Other options include for employment, study and family reunification. Using this variable it is now possible to provide some insights on what this new variable says about the labour market outcomes of “refugees” versus other migrants (i.e. those who answered “seeking asylum” to the question on reason for original migration versus those who provided different answers). The discussion below provides some of these insights.

What share and from where?

Refugees account for about 5% of the foreign-born population of the UK. The main countries of origin of refugees in the UK are Somalia, Iraq, Afghanistan, Sri Lanka and Iran (Table 1). This contrasts with the main countries of origin of the foreign-born in the UK (India, Poland, Pakistan, Ireland and Germany).

Table 1 – Main countries of origin of refugees

Note: estimates using the secured access version of the LFS. Estimates are the average for 2010: Q1 to 2014:Q3. Only includes foreign-born individuals who are 16 years of age and over.

How do labour market outcomes differ between refugees and other foreign-born groups?

In order to explore this question we can look at the three key outcomes listed in Table 2: the share that is in employment, the share in a high skilled job and earnings. The analysis only includes those 21 to 65 years. Younger and older workers are excluded because they have very different labour market dynamics. The analysis suggests that refugees have worse outcomes than other foreign-born migrants in each of the categories. The gap in the employment rate and the likelihood of being in a high skilled job is 20 percentage points, while the earnings gap is close to £10,000.

Table 2 – Labour market outcomes

Note: estimates using the secured access version of the LFS. Estimates are the average for 2010: Q1 to 2014:Q3. Only includes those 21 to 65 years of age. Only includes foreign-born individuals in wave 1 of the LFS.

What should we make of these results?

The comparison in Table 2 does not account for the fact that refugee migrants may differ from economic migrants in both observable and unobservable characteristics. Refugees have different characteristics from other migrants and this could explain their unfavourable labour market outcomes. For instance, on average refugees have spent less time in the UK, are more likely to report health problems and have lower levels of education than other migrants. The best way to compare refugees to other migrants is to control for key characteristics in a regression analysis. The key question is: How much of the difference between refugees and other migrants can be accounted for by these and other differences?

Other key questions include:

Is there evidence of refugees catching up over time?

Are the results different across refugee/migrant cohorts (e.g. those who arrived in the 1970s, 1980s, 1990s and 2000s)?

What is the role of the asylum seeker dispersal policy?

What is the role of gender?

Answers to these and other related questions can be found in a series of papers that will be posted soon on the Economics of Forced Migration website. If you are interested in these and other similar questions, make sure to visit the website frequently. New updates coming very soon …

Acknowledgement

This blog was based on data from the Labour Force Survey produced by the ONS and supplied by the UK Data Service. The use of the data in this work does not imply the endorsement of ONS or the Secure Data Service at the UK Data Archive in relation to the interpretation or analysis of the data.